Crypto Bros Sue Pharma Bro Martin Shkreli Over Making A Copy Of That Wu-Tang Album The US Government Briefly Owned
You know those lawsuits where you kinda hope everyone can lose? Yeah. This is one of those.
Some crypto bros are suing the world's most hated pharma bro, who jacked up prices on some essential pharmaceuticals before eventually being arrested and sentenced to jail. And the lawsuit is about a Wu-Tang album that almost no one has heard, that the US government briefly owned, which is now being sorta, kinda, but not really offered as an NFT where if you buy in, you only speed up the release date from nearly a century away by 88 seconds.
I fear this is going to take some explaining.
A decade ago, the Wu-Tang Clan did something of a fascinating stunt. It announced it was releasing a new album, Once Upon A Time in Shaolin, but that only one single copy would be sold. Part of the deal was that the album could only be released publicly in the year 2103, 88 years after it was sold. While the original reports suggested that it wouldn't be sold at auction, in September of 2015, it was. A few months later, it was revealed that Martin Shkreli won the bidding at somewhere around $2 million.
The timing on this is fascinating, because in between the time he won the auction and when it was revealed that he did, Shkreli became the face of all that is terrible in pharmaceuticals when he went on TV to try to defend his decision to suddenly increase the price of Daraprim, an important anti-parasitic drug from $13.50 a tablet to $750. That all happened just weeks after he won the auction.
Just a couple months after that, Shkreli was arrested and perp-walked for securities fraud. Three years later, in 2018, he was sentenced to seven years in prison, along with a $75k fine and $7.3 million in forfeiture. That included the Wu-Tang album. The DOJ's press release about the sentence literally mentions the album in the very first paragraph.
Earlier today, in federal court in Brooklyn, Martin Shkreli was sentenced by United States District Judge Kiyo A. Matsumoto of the Eastern District of New York to seven years' imprisonment for committing securities fraud and securities fraud conspiracy, to be followed by three years' supervised release. The Court also ordered Shkreli to pay a $75,000 fine and $7.3 million in forfeiture. Earlier this week, the Court signed a Preliminary Order of Forfeiture, which will allow the government to seize substitute assets to satisfy the forfeiture judgment if necessary, including $5 million held in an account that had been used to secure Shkreli's bail, the Once Upon A Time in Shaolin" album by the Wu Tang Clan, the Tha Carter V" album by Lil Wayne, and a Picasso painting.
While Shkreli was able to get out of prison after four years, in the interim, the DOJ sold off the Wu-Tang album to what was originally an anonymous buyer." In the fall of 2021, however, that anonymous buyer was revealed to be some crypto bros behind the decentralized autonomous organization, PleasrDAO, though it appears others were involved as well:
Now the album has found yet another life on the frontier of digital art and cryptocurrency, having been sold for $4 million to PleasrDAO, a collective that has existed for less than a year but has already built a reputation for acquiring high-profile digital works.
In a complex deal with multiple parties, one of whom remains unidentified, PleasrDAO acquired Once Upon a Time" after its sale in July by the federal government, which had seized the album to satisfy the balance of a $7.4 million forfeiture money judgment against Mr. Shkreli that was part of his sentencing in 2018.
As the PleasrDAO folks made clear, this album is kind of an NFT of its own. There's only one in the world, and it's about as non-fungible as can be.
In the interim, not much has happened with PleasrDAO and the album. Until now.
Just last week, PleasrDAO did two things. First, it set up a site for the album, conveniently at thealbum.com. It has a countdown until the year 2103, but allows anyone to buy... something. Technically, you appear to be buying the ability to speed up the release of the album. $1 takes 88 seconds off the time. $11 takes 16 minutes and 8 seconds, $111 gets everyone 2 hours, 42 minutes, and 48 seconds closer to release, and onward. There are typical DAO/NFT related features like leaderboards on there too.
The actual details are still pretty weird. If you pay up, you do get access to a sampler, but not the actual album.
Buyers will only receive an encrypted" version of Shaolin that they cannot actually listen to. The deal will instead unlock exclusive access to a five-minute audio sampler" composed of pieces of five tracks; the rest of the album will remain sealed.
As for the reduction in time before the album is actually released, some of that is apparently theoretical/wishful thinking:
It's worth noting PleasrDAO likely hasn'tfinishednegotiating with the group and producer Cilvaringz for full rights to Once Upon a Time in Shaolin.According to Decrypt, Pleasr has only acquired rights to 16 of the 31 tracks on the album and will share progressively larger pieces of that selected library with purchasers of the encrypted album over time."
I'm sure that won't lead to any problems at all.
And that brings us to the second bit, which should be clear from what's been discussed above. Just days before releasing this, PleasrDAO sued Martin Shkreli, claiming he violated the terms of the original purchase agreement and kept a copy of the album for himself. There's a lot of fun stuff in the lawsuit, but it boils down to this.
PleasrDAO bought the Album in two transactions in 2021 and 2024, for approximately $4,000,000, and $750,000, respectively. The Album was supposed to constitute the sole existing copy of the record, music, data and files, and packaging. It now appears, however, that Shkreli improperly retained copies of the data and files at the time of the forfeiture and has released and/or intends to release them to the public. Such actions would cause PleasrDAO to incur significant monetary and irreparable harm, and give rise to numerous claims for relief under the forfeiture order and common law.
The complaint spends almost as much time on Shkreli's pharma/securities misdeeds as it does on the actual complaint here. It makes it feel almost like this whole lawsuit is part of the marketing campaign.
As for the evidence that Shkreli violated the terms of the deal, well:
On June 18, 2022, during one of these live streams, Shkreli admitted that he played the Album for his followers. He stated, during the live stream, Yeah, that's the Wu-Tang album for all you crazy streamer people."
On June 22, 2022, during another live stream on YouTube, Shkreli was asked if he still has a copy of Once Upon a Time in Shaolin." Shkreli said, I do. I was playing it on YouTube the other night even though somebody paid $4 million for it."
On June 30, 2022, during another live stream, Shkreli again played a portion of the Album and again admitted to having retained the Album, stating: of course I made MP3 copies, they're like hidden in safes all around the world . . . I'm not stupid. I don't buy something for two million dollars just so I can keep one copy."
And then there's this:
On April 13, 2024, a member of PleasrDAO posted a photo of the Album on X (formerly Twitter), and in the comment thread below, Shkreli made various comments in which he admitted to retaining copies of the Album's data and files and streaming them to an internet audience:
a. LOL i have the mp3s you moron"
b. i literally play it in my discord all the time. you're an idiot."
c. so what are you arguing about? this thread is about someone listening to a CD > 5000 people have..."
d. yeah i have the music, sold the plastic"
Also, in case you're not yet hating everyone in this story:
On May 13, 2024, Shkreli appeared on a video-recorded podcast posted on YouTube. In the video, Shkreli stated that he burned the album and sent it to like, 50 different chicks[.]" He then asked the interviewer, Do you know how many blowjobs that album got me? You think I didn't make a fucking copy of it? Are you joking?" He also stated that thousands of people have listened to it. I sent the mp3s to all these people."
PleasrDAO thus claims:
Shkreli therefore violated the Forfeiture Order's provisions requiring Shkreli to forfeit his interests in the Album and prohibiting him from taking any action that would reduce the Album's value
PleasrDAO claims that under FRCP 71, they're able to enforce that violation, and that could be the case (certainly not my area of expertise), though it seems weird.
I had also wondered if PleasrDAO was even an actual party that could bring a lawsuit, given that part of the point of DAOs was that they weren't traditional corporations and were, instead, just effectively a smart contract. But the lawsuit clarifies:
PleasrDAO is an exempted foundation company established in the Cayman Islands located with a registered address at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
PleasrDAO then immediately sought a temporary restraining order on Shkreli, which the court promptly granted.
Having reviewed Plaintiff's Verified Complaint and the moving papers and declarations submitted by Plaintiff, the Court finds that:
Plaintiff is likely to succeed on the merits or raises sufficiently serious questions going to the merits of its claims for third-party enforcement of the Forfeiture Order; violation of the Defend Trade Secrets Act; misappropriation of trade secrets; tortious interference with prospective economic advantage; unjust enrichment; and recovery of chattel;
It also sets in motion the process to turn that TRO into a preliminary injunction, while also demanding that Shkreli reveal who he gave the album to, plus some other stuff, while demanding that all copies be returned. And I always find it funny when there's a demand to return" a digital file. As if that were a thing.
Pursuant to the Court's equitable powers, Defendant to provide an inventory and account of (i) the copies of the Album's data and files that Defendant retained; (ii) the individuals to whom he distributed those data and files; and (iii) the profits traceable to his retention and distribution of the data and files, and/or an order authorizing Plaintiff to examine Defendant for the purpose of obtaining information regarding the location of his retained and distributed copies of the Album and its data and files, under FRCP 64 and CPLR 7112; and
Seizure of all of Defendant's remaining copies of the Album's data and files and/or the return of those copies pursuant to 18 U.S.C. 1836(b)(2), FRCP 64, and CPLR 7102(d)(1).
So, yeah, from the sound of it, Shkreli's probably in some amount of legal trouble here. But, what else is new?
All in all, what a dumb situation all around. This is where we end up in a world where we create legal fictions of scarcity over something that is inherently abundant. We end up in this weird world where legitimate scarcity and artificial scarcity are considered the same thing, when any thinking person recognizes they're not.
The whole NFT/DAO space could actually be interesting in exploring those boundaries and differences, but instead mostly turned into a mess. And mixing this album into it only makes things more complex. Because here you have legit scarcity in the form of the one physical album, competing with artificially enforced scarcity of copyright laws (even though this isn't a copyright case), and the reality that music can be infinitely copied and shared without a loss.
No one is defending Shkreli here, as he seems like legitimately a horrible person. But if we just take a step back from all that and think about all of this logically, it never, ever makes any sense to argue that he shouldn't be allowed to keep a copy of the music.
Either way, this all adds up to quite the bizarre story. A decade ago, I thought that Wu-Tang experiment of the single album was a fun, creative idea to play with scarcity and abundance. But the fact that it now results in this monumentally stupid situation, involving NFTs, Martin Shkreli, the DOJ and more should say something about why trying to put artificial limits on abundance is a fool's errant.